Venue: Committee Room 2, Shire Hall. View directions
Contact: John Cole Senior Democratic Services Officer
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General Minutes: The Chair welcomed Ms Janet Palmer and the delegation from Warwickshire Climate Alliance (WCA) who were present to observe the meeting.
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Apologies Minutes: Apologies for absence were received from Councillor Bill Gifford, Councillor Sarah Millar, and Councillor Mandy Tromans.
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Members’ Disclosures of Pecuniary and Non-Pecuniary Interests Minutes: There was none.
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Minutes of the Previous Meeting To confirm the minutes of the meeting held on 10 June 2024. Additional documents:
Minutes: Resolved:
That the minutes of the meeting held on 10 June 2024 be approved as an accurate record and signed by the Chair.
There were no matters arising.
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Review of the Minutes of the Warwickshire Local Pension Board Meeting of 16 April 2024 Additional documents: Minutes: Resolved:
That the Pension Fund Investment Sub-Committee notes the minutes of the Local Pension Board meeting of 16 April 2024.
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Pension Fund Governance Report Additional documents: Minutes: Alistair Wickens (Technical Specialist, Pension Fund Policy and Governance) introduced this report which provided updated governance information including details of Warwickshire Pension Fund’s Forward Plan, risk monitoring, policies, and training. He highlighted that the Risk Monitoring Chart had been updated to slightly reduce the risk of climate change in recognition of the mitigating actions in place. These were anticipated to have some impact. The likelihood of governance failure had been slightly upgraded to reflect increased governance requirements placed on LGPS funds. The risk of ‘inability to meet demand’ had also been slightly increased to reflect recruitment and retention challenges within the Service. He advised that work was underway to review the results of the Knowledge and Skills Assessment. Training opportunities for the Sub-Committee (and Local Pension Board) would be arranged covering specific areas identified by the Assessment.
The Chair highlighted that climate change and cyber security continued to be the two areas of highest risk. He emphasised the need for constant vigilance, stating that cyber risks could be mitigated by ensuring that the right security measures were in place.
Chris Norton (Head of Investments, Audit, Insurance, and Risk) advised that a bespoke Cyber Security Policy was in place which included provision for data to be regularly backed up, ensuring that information would not be lost in the event of a cyber attack.
Resolved:
That the Pension Fund Investment Sub-Committee notes the contents of the report.
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General Activity Update Minutes: Paul Higginbotham (Investment Analyst, Pensions and Investment) introduced this report which provided a general update of investment-related activities.
The Chair highlighted commentary in the report relating to the Government’s Pensions Review which included a policy focus on “encouraging further pension investment into UK assets to boost growth across the country.” He emphasised that the Fund’s purpose was to act in the interests of its members rather than support broader national objectives for investment. The Government Review would also seek to achieve “a greater focus on value to deliver better outcomes for future pensioners, rather than cost.” He expressed his view that Warwickshire Pension Fund had enacted robust arrangements to secure value for money whilst enabling the Fund to benefit from a high standard of support from its advisors.
There was discussion of the implications of potential consolidation of LGPS funds and further consolidation of LGPS pension fund pools. The Sub-Committee would take a close interest in any future developments in these areas.
Resolved:
That the Pension Fund Investment Sub-Committee notes the report.
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Additional documents:
Minutes: Chris Norton (Head of Investments, Audit, Insurance, and Risk) introduced the report which outlined the Pension Fund’s updated Policy and Strategy for managing risks and opportunities generated by climate change. The Climate Risk Policy had been produced collaboratively with the Fund’s investment advisor, Hymans Robertson. He advised that detailed attention had been given to how the Fund would measure climate change impacts as well as approaches to engagement with fund managers to monitor action taken to decarbonise investments.
Philip Pearson (Hymans Robertson) emphasised the complexity of work to achieve climate change objectives. He highlighted that biodiversity considerations had been included in the revised Policy. The Fund would take account of decarbonisation strategies which had a positive impact on biodiversity and seek to avoid those which had a negative impact. He advised that consideration had been given to the long-term aims of the Fund. Many pension funds had set a hard target date for decarbonisation. This had the potential to be counterproductive. For example, if economies decarbonised more slowly than expected, a specific net zero target date could require pension funds to invest in increasingly concentrated portfolios of lower emissions companies, increasing investment risk and potentially compromising returns. If decarbonisation occurred more quickly than expected, a specific net zero target date could expose a pension fund to excessive transition risk. At an earlier meeting, it had been resolved to decarbonise moderately ahead of the economies in which the Fund was invested, but no later than the prevailing global target date of 2050.
Philip Pearson advised that carbon dioxide was known to have a very long atmospheric lifetime. A calculation of cumulative emissions over time would inform investment decision making. He highlighted the need for alignment with a recognised decarbonisation pathway. The report provided details of the International Energy Agency (IEA) Net Zero 2050 Scenario. This was a well-regarded, scientifically based framework which complied with the Paris Agreement. It aimed to achieve an orderly transition whilst safeguarding energy security. He advised that Border to Coast Pensions Partnership (BCPP) had adopted the IEA Net Zero 2050 Scenario to support its work on decarbonisation.
Philip Pearson highlighted details within the report outlining proposed interim targets to guide decision making on new investments. The report also included information relating to strategies for capital reallocation and stewardship. He highlighted the benefits of effective engagement with portfolio companies and other stakeholders to reduce carbon emissions and drive real-world change.
Councillor Hammersley highlighted that the principal duty of the Fund was to invest prudently to ensure that it could continue to pay benefits to its members. It would be important to achieve the right balance to achieve environmental objectives without placing the Fund at risk. He emphasised the importance of monitoring to ensure that managers and portfolio companies complied with their commitments to reduce emissions.
The Chair expressed support for an approach which rewarded companies seeking to develop climate solutions. By making astute investments, the Fund could fulfil its fiduciary duty to members and achieve reduced emissions. Companies ... view the full minutes text for item 5. |
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Warwickshire Pension Fund Voting Policy Additional documents:
Minutes: Dapo Shonola (Lead Commissioner, Pensions and Investment) introduced the report which provided details of the updated Voting Policy for Warwickshire Pension Fund. Given the proportion of listed equity assets managed by Border to Coast Pensions Partnership (BCPP), it was considered that the Voting Policy should be aligned with BCPP’s voting policies. The revised Policy was broadly similar to the existing version. However, it provided more detail on how fund managers would be expected to vote on certain issues. He highlighted specific changes, including the requirement that 30% of non-executive board members be classed as independent directors, and updated expectations for reporting by companies on progress to meet climate change objectives.
In response to the Chair, the Sub-Committee agreed the recommendations of the report.
Resolved:
That the Pension Fund Investment Sub-Committee:
1. Notes the report. 2. Approves the Fund’s Voting Policy.
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Reports Containing Exempt or Confidential Information To consider passing the following resolution:
‘That members of the public be excluded from the meeting for the items mentioned below on the grounds that their presence would involve the disclosure of exempt information as defined in paragraph 3 of Schedule 12A of Part 1 of the Local Government Act 1972.’ Minutes: Resolved:
That members of the public be excluded from the meeting for the items mentioned below on the grounds that their presence would involve the disclosure of exempt information as defined in paragraph 3 of Part 1 of Schedule 12A of the Local Government Act 1972.
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Quarterly Investment Monitoring Report Q2 2024 Minutes: The Sub-Committee held a confidential discussion. |
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Funding Risk Update and 2025 Valuation Planning Minutes: The Sub-Committee held a confidential discussion.
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Exempt Minutes of the Previous Meeting To confirm the exempt minutes of the meeting held on 10 June 2024. Minutes: Resolved:
That the exempt minutes of the meeting held on 10 June 2024 be approved as an accurate record and signed by the Chair.
There were no matters arising.
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